Thomas Staggs: Disney’s Heir, Apparently

Robert A. Iger was grasping for words. Standing before shareholders in San Francisco last month, the normally quick-witted Mr. Iger, chief executive of the Walt Disney Company, had been caught off guard by Brooke Ledwith, an inquisitive 6-year-old. “Who was the first Disney princess to walk on a Disney cruise ship?” she asked, standing on tiptoe to reach a microphone.

As leader of the world’s largest entertainment company, Mr. Iger has command of many facts, but the nautical history of princesses is not one of them. “Tom?” he finally said, as titters rose from the audience. “Can you answer?”

Thomas O. Staggs, who became Disney’s No. 2 executive in February, instantly supplied a satisfying response from his seat in the front row. “We couldn’t choose just one,” he told the girl. “But Cinderella was definitely one.”

For 25 years, Mr. Staggs has devoted himself to the Disney brand, whether closing the $7.4 billion purchase of Pixar in 2006 as chief financial officer, or christening Walt Disney World’s Seven Dwarfs Mine Train last year as theme park chairman. (Yes, Snow White was there too.)

But now Mr. Staggs finds himself under intense scrutiny as next in line for the Magic Kingdom’s throne. Can he step in smoothly when Mr. Iger retires as expected in 2018? It’s a tantalizing question given Disney’s rocky history of succession.

Disney has made it clear that his elevation to chief operating officer in February was not a coronation. So Mr. Staggs must now walk one of corporate America’s most daunting gantlets, working to convince board members that he is up to an almost impossible task — following in Mr. Iger’s colossal footsteps — while remaining carefully subordinate to his mentor. By 2018, Mr. Staggs will either get the job, possibly Hollywood’s biggest, or he will be facing the end of his Disney career.

As princes go, Mr. Staggs has his own list of accomplishments. In the 12 years he spent as chief financial officer, he worked not only on the Pixar deal but also on the $4 billion acquisition of Marvel Entertainment in 2009. In the five years he spent as chairman of Disney Parks and Resorts, Mr. Staggs more than doubled theme park operating profit, to $2.66 billion, and fixed the kinks in an important $1 billion Disney World technology project.

But none of those successes cut to the heart of why Mr. Staggs beat out another internal candidate, James A. Rasulo, to become the favored contender to lead Disney, a company that is viewed as a national treasure by its many passionate fans.

Time and again while running Disney’s vast theme park operation, Mr. Staggs, 54, proved he understood how crucial it was that generations of consumers continued to feel a primal connection to the company.

That has been one of Mr. Iger’s fundamental beliefs during his tenure as chief: In a world of infinite entertainment choices, enhancing and protecting Disney’s warm, fuzzy, family-friendly brand must be priority No. 1, even above quick-hit profits.

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Thomas Staggs, right, with his boss, Robert Iger, center, at the opening of the “Ratatouille” attraction at Disneyland Paris in 2014.CreditEric Feferberg/Agence France-Presse — Getty Images

“Tom definitely knows Disney and what it takes to make Disney so special,” Mr. Iger said at that shareholder meeting. Mr. Staggs, in a light gray suit, stood and offered a humble wave to the crowd, where Roy P. Disney, Walt Disney’s grandnephew, smiled and clapped.

It’s an understanding that goes well beyond Mr. Staggs’s training as a financial steward. Consider his creative input for a coming $500 million “Avatar”-inspired addition to Disney’s Animal Kingdom in Florida. In 2011, Mr. Iger and Mr. Staggs had breakfast with James Cameron, the director of “Avatar,” and Jon Landau, who produced the movie. They were discussing a deal to make “Avatar,” which took in $2.8 billion worldwide, part of Disney’s Hollywood Studios theme park.

Out of the blue, according to Mr. Landau, Mr. Staggs floated a more ambitious idea: What about instead adding an entire “Avatar” land to Animal Kingdom, a park with an ecological theme that could use a kick in the pants?

“It was Tom who had the vision to say, ‘Hey, maybe this isn’t just part of a studio tour — let’s think bigger,’ ” Mr. Landau said. “Tom is not going to spend Disney’s money frivolously. But he is capable of making the best creative decision despite it not being the most economical decision, and that is crucial for the Disney brand.”

Mr. Landau added, “You don’t get to run Disney if you’re an accountant.”

M.B.A. With Imagination

On paper, Thomas Owen Staggs is exactly that — a number cruncher. That perception led to a ripple of dismay in Hollywood’s creative ranks when he was elevated in February: Oh, great, another entertainment mogul with limited experience in the actual making of entertainment.

The holder of an M.B.A. from Stanford, Mr. Staggs, who declined to be interviewed for this article, worked at the investment bank Dain Bosworth and then at Morgan Stanley. He joined Disney in 1990, helping pull together deals like the purchase of Capital Cities/ABC for $19 billion in 1995, and was named chief financial officer in 1998 by Michael D. Eisner, who was then Disney’s chief executive.

“Tom was a star C.F.O.,” said Alan D. Schwartz, the executive chairman of the investment firm Guggenheim Partners, who previously ran Bear Stearns. In particular, Mr. Schwartz said that Mr. Staggs had helped calm Wall Street when Disney endured an unsuccessful 2004 hostile takeover attempt by Comcast and a simultaneous shareholder effort to oust Mr. Eisner, which was ultimately successful.

Mr. Staggs, known for his ever-present loafers and thrust-forward chest, is also a natural showman. Some might even call him a ham.

In 2011, he appeared onstage at a Disney fan convention wearing a gaudy earring that dangled to his shoulder, an insider reference to the colorful style of Joe Rohde, the Disney imagineer leading the “Avatar” park design. In 2012, while attending the unveiling of new attractions at Disney’s California Adventure in Anaheim, Mr. Staggs did the limbo under a security rope.

Most notably, not long after he took over the parks division from Mr. Rasulo in January 2010 — they switched jobs, with Mr. Rasulo becoming chief financial officer — Mr. Staggs cast himself as the star of a comedic video. Used at fan conventions, the video showed Mr. Staggs in costume performing various Disney theme park jobs: wisecracking Jungle Cruise skipper, balloon salesman, topiary clipper, barbershop quartet singer.

“Nice and juicy!” he said in one segment, handing out a barbecued turkey leg. (At the time, a Disney public relations operative winced at the turkey leg bit as too corny. Mr. Staggs kept it in.)

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Some Disney insiders suspect the willingness of Mr. Staggs to show a warm, wacky side was a calculated effort to differentiate himself from Mr. Rasulo, who is not known for lightheartedness. To put it in Disney terms, if Mr. Staggs is Woody from “Toy Story” — the popular Everyman — Mr. Rasulo can come across like Stromboli from “Pinocchio,” a hot-tempered character focused on commerce.

Whatever the motivation, it worked, at the very least helping Mr. Staggs win the loyalty of important members of Disney’s creative core, including John Lasseter, the Pixar co-founder who now oversees Disney’s entire animation operation. Speaking at an event for fans of the movie “Cars” in 2012, Mr. Lasseter squeezed Mr. Staggs’s arm and compared him to an ice cream truck, “because of his good humor.”

Mr. Lasseter’s high opinion of Mr. Staggs may seem beside the point, but that kind of warm connection is critical to Disney’s future. In many ways, the company’s continued success turns on the ability of Mr. Staggs — should he indeed win Mr. Iger’s crown — to sustain a corporate environment where creative powerhouses like Mr. Lasseter are happy and can flourish.

Mr. Iger’s tenure has largely been about acquiring boutique content factories, including Lucasfilm, the “Star Wars” studio purchased in 2012 for $4 billion. To continue to grow, Disney needs those creative assembly lines to keep humming, a difficult task given the imagination-numbing realities of life inside a mega-corporation.

The theme park division that Mr. Staggs led is much bigger than most people realize. Walt Disney Parks and Resorts employs 130,000 people on three continents, with 13 parks attracting an estimated 133 million visitors annually. Rounding out the division: four Disney Cruise ocean liners, about 40 hotels, a condo time-share empire, the stand-alone Aulani resort in Hawaii and the Adventures by Disney private tour business.

The challenges come in waves: The violent tossing of the 4,000-passenger Disney Fantasy cruise ship in a hurricane. A helium shortage threatening balloon sales. Construction hiccups at Shanghai Disneyland. The unveiling of $1 billion in improvements at Disneyland Resort in California. Mr. Staggs once had to contend with all of those in the span of six months.

Mr. Staggs is also credited with sorting out technological problems with MyMagic Plus, a new Walt Disney World visitor management system that changes how Disney World visitors do just about everything. The $1 billion system, designed to increase the length of time people stay at the sprawling resort, involves equipping guests with data-collecting electronic wristbands. Started under Mr. Rasulo, who declined to comment for this article, the system had a difficult birth because of technology hurdles and infighting. Mr. Staggs brought in new managers and pushed them to look harder at emerging technology. The system is now running smoothly.

Still Much to Prove

Mr. Staggs’s succession is not a given. Disney’s board has made it clear that he must still prove he has what it takes to be chief executive. Part of that insistence may reflect Disney’s history in choosing leaders. The bumpy transition of power from Mr. Eisner to Mr. Iger in 2005 became an example of what not to do. It got so bad that Roy E. Disney, the nephew of Walt Disney, used the lack of succession planning in a public attack on Mr. Eisner.

And, truth be told, Mr. Staggs has some dents in his armor.

He has not made a firm ally of Isaac Perlmutter, the strong-willed Marvel chief executive, who has been a vocal supporter of Mr. Rasulo.

In particular, Mr. Perlmutter approved of Mr. Rasulo’s aggressive adoption of a cost-cutting initiative set forth by Mr. Iger. Mr. Perlmutter, who declined to comment, does not run Disney, of course, but he is one of the company’s largest individual shareholders, along with George Lucas and a trust controlled by Laurene Powell Jobs, the widow of Steve Jobs. (Mr. Rasulo is not under pressure to leave, but his contract expired in January, and he is widely expected to move on.)

Mr. Staggs’s willingness to spend more to potentially make more, as with “Avatar” land, also troubles some investors, particularly those who fret that the parks business is too exposed to factors out of Disney’s control: safety threats, economic downturns, a measles outbreak like the one linked to Disneyland late last year.

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The planned $500 million “Avatar” extension to Disney’s Animal Kingdom, as imagined in a rendering, top, is credited to Mr. Staggs.CreditWalt Disney Imagineering

Not all of the changes Mr. Staggs put into motion at the theme park division have come off without a hitch. Concerned about rampant misuse of its policies for accommodating disabled riders, Mr. Staggs in 2013 began a new procedure.

Before, people unable to stand in long lines for rides were able to request a pass that gave them near-immediate access. But cheating proliferated. Under the new policy, disabled customers can make what amounts to a reservation at a ride: Come back at this specific time and you will be let on. The majority of disabled visitors have adapted with ease, but roughly two dozen families with autistic children are now suing Disney for discrimination, arguing that their children do not have the patience to wait for a reserved time, even if they are not waiting in a line.

In a statement, Disney noted a long history of providing “an inclusive and accessible environment,” adding that the legal claims “are without merit.”

By far the biggest hurdle Mr. Staggs faces has nothing to do with him and everything to do with Mr. Iger. Under Mr. Iger’s leadership, Disney has been on a tear. Powered by acquisitions, a rejuvenated animation studio and expansion overseas, Disney shares have recently been trading at about $109, a record for the company and up from $24 when Mr. Iger took over in 2005. Last year, Disney had $7.5 billion in profit.

“I don’t usually like to talk publicly about C.E.O.s, making them feel good about themselves,” Michael Nathanson, a senior media analyst at MoffettNathanson Research, said in an interview in October, when Mr. Iger extended his contract to June 2018. “But he has simply been doing an amazing job.”

Mr. Staggs will have plenty of opportunities to prove himself worthy, or not, over the next three years. On the immediate horizon, Disney needs to fill a leadership vacuum at its fast-growing consumer products business and to successfully introduce “Star Wars: The Force Awakens” in December, which signals the restart of that galactic franchise after a decade of big-screen dormancy. Shanghai Disneyland, a $5.5 billion project that Mr. Iger has called one of Disney’s most important projects ever, is scheduled to open next spring.

As he seeks to familiarize himself with all of Disney’s nooks and crannies, Mr. Staggs has been sitting in on meetings and asking questions. Keeping up with him can be a tall order, according to people who have worked with him. He has an especially keen memory.

Mr. Staggs’s command of his subject matter comes up repeatedly in interviews. A friend, Robert A. Kotick, the chief executive of Activision Blizzard, an interactive gaming company, said he recently saw Mr. Staggs go a few intellectual rounds during a dinner at the home of Charles T. Munger, the longtime business partner of Warren E. Buffett. “Mr. Munger has an unforgiving intellect, and Tom more than held his own,” Mr. Kotick said.

Mr. Staggs, who has three young sons with his wife, Melanie, grew up in Excelsior, Minn., where he played trumpet in his school marching band and worked as a Kentucky Fried Chicken cook. The youngest son of a salesman father and a homemaker mother, he first studied music at the University of Minnesota but quickly shifted his major to business.

Cooking and food have become two of his biggest passions, spilling over into Disney’s parks. Over the last few years, Mr. Staggs has pushed for improvements, talking proudly in interviews about the arrivals of a fried green tomato sandwich to the offerings at the Frontierland cafe and a quinoa salad in Fantasyland.

In 2012, over an eight-course prix fixe dinner at Victoria & Albert’s, perhaps Disney World’s fanciest restaurant, Mr. Staggs offered his dinner guests (this reporter among them) an explanation for his attention to such seemingly minor matters. “A lot of it is about the Disney brand,” he said. “We’ve got to try to keep moving the bar higher in ways big and small, and details matter.”

He learned that as a boy, he continued, when he was fired from a paper route. He kept the specific reason private but imparted the lesson: “That taught me not to cut corners,” he said, flashing a grin.

Correction:

An article last Sunday about Thomas O. Staggs, the heir apparent to Robert A. Iger as chief executive of the Walt Disney Company, misstated the timing of Mr. Staggs’s work at the investment bank Dain Bosworth. It was before earning his M.B.A., not after.